South Korea’s Health Insurance System Faces Imminent Crisis, Hair Loss Debate Adds Fuel to Fire
The future of South Korea’s universal healthcare system hangs in the balance as dwindling reserves and a rapidly aging population threaten its sustainability, a crisis brought into sharp focus by a recent debate over covering hair loss treatment.
The proposed consideration of health insurance coverage for hair loss, initiated by President lee Jae-myung in December 2024, has ignited a national controversy, but experts warn it distracts from a far more pressing issue: the impending depletion of the National Health Insurance (NHI) fund. The Ministry of Health and Welfare,seemingly recognizing the precarious timing,has already signaled a cautious approach,with Minister Jeong Eun-kyung stating on December 17th that coverage for genetically-caused hair loss – currently excluded – would require a extensive review of “criteria,feasibility,and financial impact.”
Understanding the Structure of South Korea’s Health Insurance – South Korea’s health insurance operates on a pay-as-you-go model, meaning premiums collected in a given year cover healthcare costs for that same year. The NHI reserve, as of 2024, stands at 29.7221 trillion won, covering approximately 3.6 months of the nation’s average monthly healthcare expenditure (8.1135 trillion won, totaling 97,362.6 billion won annually).
The Looming Threat of Depletion – The NHI financial balance is projected to turn negative in 2026 (deficit of 500 billion won), reaching -900 billion won by 2030 and a staggering -65.8 trillion won by 2033. Government projections indicate reserves will be tired entirely by 2033. The 2024 balance of health insurance premiums is 1.7244 trillion won, a 58.2% decrease from 2023 (4.1276 trillion won).
Limited Options for Stabilization – Addressing the crisis requires increasing revenue through higher premiums, increased government subsidies, or expanded health promotion contributions. Insurance premium rates are capped at 8% for office workers,nearing the limit. A planned 0.1 percentage point increase in 2026 to 7.19% is likely the last feasible adjustment without legislative changes. Public resistance to premium increases is high, with 77.6% finding current premiums burdensome (August 2025 Korea Employers Federation survey).
“Because of the structural problems of our country’s health insurance with many non-covered items and high out-of-pocket costs, the burden of insurance premiums felt by health insurance subscribers is greater,” a healthcare industry official stated anonymously. “Increasing health insurance premiums will not only increase the burden on subscribers, but will also inevitably increase the burden on companies that pay half of workers’ health insurance.”
The state of government subsidies and health promotion contributions, other vital components of the NHI, offers little reassurance. the full scope of these challenges will be explored in a follow-up report examining the interplay between the hair loss coverage debate and the broader health insurance depletion crisis.
